Raid emergency fund to pay off windows?

[takemewest]

Hi everyone,

I'd love to know what you think is the right thing in this scenario:
We recently had all new windows installed (our house was an icebox last winter, and now we're living the warm life), financed by the window company with a o% interest rate loan if paid in full within a year. We have 8 more months to pay, and will easily be able to pay it off by the November due date. We have approx $5300 left to pay. We also owe about $1800 in taxes this year. We have $10,000 in an emergency fund. However, I keep reading about how much better it is to max your IRAs early and let that grow, so I am contemplating two options:

1.  Take our e-fund money and totally pay off the windows and taxes this month, leaving us a very slim emergency cushion for a while in order to more aggressively funnel our cash flow into our IRAs early on in the year (we've never done this before) and see how that stacks up compared to the monthly amount we put in to max it out over the year. Also, I hate debt, and the recurring window payment is driving me nuts. We'd have at least a little left over in the e-fund, and I'd estimate it would take us until June  to fully max the IRAs.

2. Take our e-fund money and a little extra cash from this month and fully fund two IRAs now so they can grow over the year. We'd have zero money left in an emergency fund, and would continue making the monthly window payments by splitting our monthly extra cash between that and building back up the e-fund.

Other things to consider: We have no debt but our mortgage. If we did the first option, I do have a recurring side hustle that starts each April that will allow us to quickly replenish our e-fund by probably July while also filling up the IRAs before we're halfway through the year. Jobs are stable enough that, barring WWIII, there wouldn't be any change this year.

We're on one income right now, so if we do any of these options, there isn't much flexibility for "What ifs" until my side hustle starts. An unexpected bill would have to be paid in lieu of putting our monthly extra cash back in the e-fund, so that part does worry me.

Hopefully I've given enough context to solicit your opinions, if not, I'm happy to provide more. Mostly, I'm just curious if it sounds pretty stupid to wipe out our emergency fund to test out maxing our IRAs early and/or pay off this purchase. Yes, I realize best case scenario would have been pay for the windows in cash, but we weren't up for freezing our asses off again this winter.

[Novik]

I wouldn't drain your e-fund for 0% debt or IRAs. I would agree that "it sounds like a pretty stupid" idea. Understandable to contemplate, bad to do, especially on one income, especially with a mortgage. No job is 100% stable.

Not sure how many months of frugal expenses your e-fund currently covers, but I'd recommend figuring out what 3 months is. If that's less than 10k, use some of the extra to pay off the taxes ASAP, and the rest to "jumpstart" your IRAs.

You can then split your monthly leftovers 3 ways - window payments, e-fund rebuild, IRAs. This will get your windows paid off on time as planned (0% interest, no rush!), and with your side-hustle the IRAs and/or e-fund will be fully funded by mid-summer.

If 10k is <3 months expenses, I would be leery of doing anything except maybe paying off the taxes from it.

[takemewest]

Thanks, Novik. It felt like a stupid a idea when I wrote it out, but I figured it was worth getting feedback on. ;)

$10k is about 4.5 months of our expenses, so I like your idea about splitting it up.

[Novik]

Glad it helped - I totally get wanting to have the debt gone no matter what :)

Sounds like you have room in your e-fun for taxes + IRA startup. While normally I'd be more conservative in how many months of expenses to have, you have a lot of goals so putting this money to work seems like a good idea.

[Dicey]

You could consider rolling the balance to a zero interest CC.

OTOH, I'm a lazy-ass, never managed to fund in the first quarter, and *gasp* I even use a financial planner. I'm also FIRE, with more money than I ever imagined possible. So consider the source when you read my next bit of advice.

It won't derail your FIRE plans to make your contribution after you pay off the windows.  In fact, if you save the difference in your post-windows utility bills, you will still come out ahead. Way ahead. Methinks you're hairsplitting a bit.

[Sibley]

Don't drain your EF for 0% debt. Just pay it off before the promo period is up.

[takemewest]

Methinks you're hairsplitting a bit.

Haha, yes, Diane! Methinks you're right. Sometimes all the different routes to "right" make me feel like I should be overanalyzing every step. This, however, is more simple than I'm making it out to be, and I'm super glad for the reminders.